Most on Fed see interest rate close to 2% by the end of 2016

Short-term interest rates will increase start to rise in 2015 but will reach just below 2% by the end of 2016, according to new projections released by the Federal Reserve on Wednesday, from a current level that’s just above zero.

At the end of 2016,eight of the 17 Fed officials see the Fed funds rate at 2% or a little less. Four central bankers see rates a little higher, closer to 2.75%.

Only 3 Fed officials expect rates to reach 4%, which the central bank sees as the long-term “neutral” level of interest rates. Two Fed officials believe short-term rates will be 1% or lower.

Fed officials expect short-term rates to end 2015 closer to 1%.

This is the first look at the Fed’s projected rate path for 2016. Fed officials believe that 4% is the longer-run neutral level for short-term rates.

In its first forecast for 2016, the Fed sees economic growth in a range of 2.5 to 3.3%. The unemployment rate is expected to be in a range of 5.4% to 5.9%. Headline inflation is projected to be in a range of 1.7% to 2%.

There was not much movement from the last forecast in June on when the Fed will start to tighten.

According to the projections, 12 Fed officials expect the first rate hike in 2015, just down from 14 in June. Two Fed officials see the first rate hike in 2016, compared with 1 in June.

There were only 17 Fed officials in this survey, compared with 19 in June.